Kiwi Property
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Kiwi Property Annual Report 2015 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa We are Kiwi Property – 21 years young and the largest listed diversified property company on the NZX. WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa We own and manage a $2.3 billion portfolio of shopping centres and office buildings across New Zealand. In our 2015 financial year, we moved to a streamlined corporate structure and launched our new Kiwi Property brand. Our new logo is all about people and places. It shows the intersection between people (the human brushstroke axis) and places (the structural axis) coming together as one. It’s a simple expression of ‘X marks the spot’ and a reminder for us to put the ‘X’ in exceptional. We’re passionate about what we do and we work hard to deliver exceptional results. We have a dedicated Our goal is to Our shopping Our office buildings team of over provide our centres attract provide 118,000 sqm 130 employees investors with long- 45 million of workspace, committed to term total returns customers and meeting the demands providing superior of >9% per annum, generate annual of both business risk-adjusted returns and annual earnings sales of $1.29 billion and government for our investors per share growth of >2% 1 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa Results summary. $89.0m (+13%) $115.2m (+14%) Operating profit1 Profit after tax $2.28b 33.5% Property assets Gearing1 98.4% 4.5 years Occupancy Weighted average lease term 9.7% per annum Total return since inception 1. For definitions refer to the Summary Financial Results on page 13. 2 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa Contents 4 Our year of transformation 6 Welcome from the chair Positive transition completed Strategy update Outlook and dividend guidance 9 Annual review Absolute focus on investor returns Financial performance Capital management Operational performance Strategic acquisition and divestment Sustainability achievements People and remuneration Strategy and outlook Our values Our directors Our leadership team Calendar of key dates (Dates are indicative and may be subject to change) 25 Property compendium 29 May 2015 Our portfolio at a glance FY15 final dividend payment Retail portfolio overview and performance 31 July 2015 • Urban chic coming to LynnMall Annual meeting • Sylvia Park – stronger than ever Where: Eden Park Stadium • New Zealand’s largest solar array Address: Level 4 Lounge West, South Stand unveiled at Sylvia Park Gate G Eden Park, Reimers Avenue • Individual retail asset summaries Suburb: Kingsland Office portfolio overview City: Auckland and performance Time: 10.00am • Major milestones achieved in New Zealand’s largest seismic 20 August 2015 strengthening project Bond interest payment • 56 The Terrace gets a facelift • Individual office asset summaries 17 November 2015 FY16 interim result announcement 49 16 December 2015 Financial statements and other information FY16 interim dividend payment Five-year summary Independent auditors’ report Financial statements This annual report is dated 15 May 2015 and is signed on behalf of the board by: Corporate governance Remuneration report Shareholder and bondholder statistics MARK FORD JOANNA PERRY IBC Chair of the Board Chair of the Audit Directory and Risk Committee 3 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa KIWI PROPERTY ANNUAL REPORT 2015 Our year of transformation. New board member Jane Freeman is appointed as an independent director Excellence bank debt recognised ASB North Wharf wins refinanced the Supreme Award at New leadership the Property Council team member of New Zealand Trevor Wairepo is Rider Levett Bucknall appointed General Property Industry Counsel and Awards Company Secretary APR 2014 MAY JUN JUL AUG SEP Milestones achieved The foundations Strategic divestment and transfer beam Our remaining 50% strengthening interest in 205 Queen Financial position works were is sold strengthened completed as part We successfully issued of The Majestic Centre seismic $125m upgrade in seven- year We meet bonds our investors Our annual meeting of unit holders is well attended in Auckland 4 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa OUR YEAR OF TRANSFORMATION Government office project commenced We begin construction on the Valuation uplift $72m We recorded a expansion and refurbishment $58m of 56 The Terrace increase in the value of the portfolio to a record Kiwi Property launched Investors approve MCNs convert corporatisation $120m of MCNs Our investors converted to shares voted overwhelmingly in favour of our corporatisation Leading proposal sustainability New board initiative member New Zealand’s Mary Jane Daly largest solar array is appointed as was commissioned an independent at Sylvia Park director JAN OCT NOV DEC 2015 FEB MAR Redevelopment commenced We began Organisational construction of a review completed Gavin Parker is $39m appointed to the entertainment and newly created Chief Strategic dining precinct Operating Officer role at LynnMall and Stuart Tabuteau acquisition is appointed Chief We purchased Financial Officer Apex Mega Centre (subsequently rebranded as Sylvia Park’s lifestyle precinct) for New leadership $64m team member Christopher Hermann is appointed General Manager Interim result Development An interim after tax profit of $23.8m recorded 5 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa KIWI PROPERTY ANNUAL REPORT 2015 Welcome from the chair Positive transition completed. Welcome to the first annual report for Kiwi Property. In our first full year of operation as an internally managed entity, we have produced an encouraging and positive result. 6 WorldReginfo - b63e1432-8b52-4be9-80b9-2890c71041aa WELCOME FROM THE CHAIR The Company posted an after tax framework for employees which is profit of $115.2 million for the year designed to strengthen the alignment “The positive ended 31 March 2015, up from between management reward levels and $101.3 million in the prior year. the achievement of our investor goals. changes made Shareholders will receive a final cash During the year, we further strengthened dividend of 3.25 cents per share, taking the Company’s governance with the in our business the full-year dividend to 6.50 cents per appointment of two new experienced share, in line with guidance. independent directors, Jane Freeman have given us The 2015 financial year was another and Mary Jane Daly. period marked by positive change for the opportunity Kiwi Property. In December 2014, our Strategy update investors overwhelmingly approved our Amidst all this change it is important to to refresh our proposal to move from a trust to a note that our objective, which has served company structure. As a result of this investors well for the past 21 years, has name and corporatisation, we changed our name to not changed. Kiwi Property remains Kiwi Property and now trade under the committed to providing investors with brand, which is ticker code KPG on the New Zealand a reliable investment in New Zealand Stock Exchange. property, and we continue to target proudly front The internalisation of management in superior risk-adjusted returns over time December 2013, coupled with through the ownership and active and centre on corporatisation in December 2014, is management of a diversified, enabling us to deliver ongoing benefits to high-quality portfolio. the cover of shareholders, including cost savings. I am Our strategy to achieve this objective has pleased to report that we have exceeded three core pillars: a firm commitment to this report.” our pre-tax net expenditure savings maintaining a strong financial position; target of $8 million per annum, as the active management of our assets to projected at the time of internalisation. drive investment performance; and a Our business is now underpinned by focus on investment decisions that add When we reviewed our strategy last year, both a lower cost management platform value for our investors. we set a goal to deliver long-term total and by a strategy that is singly focused returns to investors of greater than 9% per Over the course of the year, the on achieving our shareholder goals. annum, underpinned by pre-tax management team undertook a range Corporatisation also provides the benefit distributable earnings per share growth of of capital management, divestment of a streamlined corporate structure and at least 2% per annum. The Company is and acquisition initiatives consistent greater protection for our shareholders well positioned relative to these goals and with this strategy. Our Chief Executive, under the Takeovers Code and we project an increased cash dividend of Chris Gudgeon, provides a full summary Companies Act. 6.60 cents per share for the 2016 financial of these activities and our financial year, subject to a continuation of The positive changes made in our results, in the Annual Review reasonable economic conditions. business have given us the opportunity commencing on page 9. to refresh our name and brand, which is Thank you for your support of proudly front and centre on the cover of Outlook and dividend guidance Kiwi Property. I hope you enjoy reading this report. The New Zealand economy is growing this annual report. Our new brand identity is an expression positively and market conditions, of our commitment to create exceptional particularly in Auckland, are expected to places and deliver exceptional results for remain positive through the 2016 our investors. financial year for both the retail and office sectors. Supportive factors include above